You will have to wait for a disaster to strike (or bombing I think) to reduce the quality. When you click on a planet, in the box at the bottom left of the screen you can see its details including its quality in %

As a rule of thumb, anything above 50% can provide a profitable colony in the long run. The higher, the better!

If the planet becomes damaged you will see it say instead Quality 52% Max 82%. This tells you the current and full quality of the planet. Don't wait for this to happen! If you have a colony with 2 billion or more people and you can afford it, build a terraforming facility. Always best to be prepared for emergency! Some races are less likely to encounter disasters on certain types of planets though. For example Shandar can avoid disaster on Volvanic worlds. So if you are playing them, perhaps it is best to build the terraforming facilities at your non-volcanic worlds first

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"My body may be confined to this chair, but my mind is free to explore the universe" - Stephen Hawking

Actually, Woodman, I'm sorry to say that for me terraforming facilities are generally useless. The planet regenerates by itself, slower, of course. Your example is a good one, but such cases are very rare. Disasters by themselves are quite rare. If bombardment was used more frequently, or if ground combat would be remade to damage the planet a little, maybe then the TF would see much use.

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"Only an idiot fights a war on two fronts. Only the heir to the throne of the Kingdom of Idiots would fight a war on twelve fronts," - Londo Mollari

The bloated game economy makes them a no brainer like most of the building stuff in the game but they do not really match the description either as you would think it would improve planet quality for poor planets.I have tweaked the A.I's policy files so they all use bombard whne possible so it has a use in a modded game.

I'm with Ashbery. I have no idea what to spend my cash on once the mid-game is over. I build whatever I can on everything, just for something to do between waiting for my crash research programs to finish.

I think the terraforming facility is more useful for colonies you have invaded after massive bombardment. Now more than ever since with the bombardment focusing on troops you may take over a planet bursting with population living in low quality. But yeah, i do wish you could get a boost to quality max at least for low quality planets so that they had some non-military use.

It does seem terraforming doesn't get to play the large role it does in many other 4x games - I think it's a shame. I'd love to see the ability to transform barren planets into useable ones as well as improving the quality of already settled planets (a system like that of Endless Space would work well). The game does sort of have terraforming in the sense that colonization techs improve growth rate of previous class of planets which can be understood as that they are terraforming the planets but having an actual full terraforming system where planets graphically change and you can change a low-quality volcanic world into a pristine earth-like one (at a heavy cost) would be interesting.